Trade Secret Misappropriations

Staff Writer, Jul 19, 2005

Trade secrets entail any information that is not widely known and that present an advantage of some sort to the owner over the general public

What is a trade secret?

According to the Espionage Act of 1996, a trade secret is defined as any information relating to business, finances, science, technology, economy or engineering and can be stored electronically, graphically, photographically or in writing. In general, trade secrets entail any information that is not widely known and that present an advantage of some sort to the owner over the general public.

Possible trade secrets

• Patterns
• Programs
• Codes
• Procedures
• Devices
• Compilations
• Prototypes
• Techniques
• Methods

Protecting trade secrets

Because trade secretes are by definition any information that is not widely known, the owner thereof has to take reasonable efforts to keep the information secret. These efforts may include limiting the number of employees that have access to the secret, conducting interviews of the employees in order to clarify the importance and legal implications of sharing the company’s trade secret or coding the access area. Today, the most common safeguards that companies practice in order to protect secrets include:

• Building access controls
• Escorting visitors
• Marking sensitive documents
• Non-disclosure agreements
• Shredding material when no longer needed

Marking trade secret information

Even though it might seem somewhat too obvious, law enforcement requires that trade secret information is clearly identified through proper markings. Each company is left to decide for itself how such information will be marked. Usually the terms “company proprietary” or “company sensitive” are used in order to identify secret information.

In soliciting bids, the government has to inform potential contractors how trade secret information should be marked in order to protect it. This means, that each title page and each page containing secret information must also be identified and marked properly.

Law enforcement

Sharing trade secrets is considered a federal criminal offense. Under the Economic Espionage Act there are two separate provisions that deal with the theft or misappropriation of trade secrets. The first provision touches upon foreign economic espionage, requiring that the theft lead to a benefit of a foreign government. The second provision governs commercial theft or trade, regardless of who benefits from it.

Consequently, any person convicted of economic espionage can be send to prison for up to 15 years and can be fined up to $500,000, or both. Any person convicted of commercial theft can be imprisoned for up to 5 years and fined up to $100,000. Fines for corporations convicted of these crimes can be fined up to $10 million.

Protecting your trade secrets

Company information, especially the information that is vital to economic gain and capacity are important assets and possess significant value. Without that information, a company would be not the same and there was no purpose to continue to do business. Therefore it is important to keep your trade secrets safe and protected.

Updated: H.B.